The Central Bank of Nigeria has said that, Nigeria needs about S$100 billion annually to address the nation’s infrastructure deficit.
Speaking at the 30th Anniversary Conference and Awards of the Finance Correspondents Association of Nigeria (FICAN), in Lagos on Saturday, Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, said the current level of infrastructure deficit is a major constraint to economic development and attainment.
Represented by the Director of Corporate Communications Department of the CBN, Mr Osita Nwanisobi, Emefiele said: “While infrastructure deficit in Nigeria is estimated to be about 1.2 percent of GDP, it is projected that the Federal Government needs to commit about US$100 billion annually to address the nation’s infrastructural deficit.”
Part of the CBN boss statement read: “Nigeria is no exception to growth-limiting challenges, that is infrastructure deficit and MSMEs’ lack of access to credit. While MSMEs have been recognized to play a critical role in supporting the growth of the Nigerian economy; poor access to finance, particularly credit; and lack of quality infrastructure, such as electricity and access to market, continue to pose a significant constraint to the growth of MSMEs in Nigeria. Thus, weak and inadequate infrastructure, as well as the poor flow of credit to businesses impact severely on economic growth, as well as human development.
“In realization of the importance of access to finance and infrastructure to economic growth and development, the CBN has taken steps beyond its traditional macroeconomic mandates of ensuring price and financial system stability, as well as maintaining a strong external reserve.
To this end, the Bank introduced several development finance policies and programmes to improve access to credit for MSMEs, deepen the Bank’s support to the real sector, support job creation, and build a robust payment system infrastructure to help drive financial inclusion.
“My keynote address today will focus on the Bank’s efforts at addressing both challenges relative to MSME development in Nigeria, that is weak infrastructure and poor access to finance.
First, I will be starting by outlining the access to finance and infrastructure challenges to MSMEs in Nigeria, particularly given the economic consequences of the Covid-19 pandemic on flow of investments towards infrastructure development and credit to MSMEs.
“Infrastructure deficit continues to hinder economic growth and development in sub-Saharan Africa (SSA). Beyond economic growth, infrastructure impacts the quality of life of the people and the growth of the business sector.
The deficit, estimated to be around US$31 billion a year, continues to hinder productivity, increases the costs of doing business and isolating markets. Bridging the infrastructure gap, therefore, as a means of overcoming the region’s economic and developmental challenges cannot be over-emphasized.
While governments in sub-Saharan Africa continue to make progress in closing the deficit over the past decade, the continent still lags the rest of the world in coverage of key infrastructure classes, comprising the ICT, energy, roads and rail, transportation, water, and sanitation.
“There is no shortage of effort at bridging sub-Saharan Africa’s infrastructure deficit, as annual public expenditure on infrastructure continue to increase with most governments in the region spending about 6 – 12 percent of their GDP annually on infrastructure.
According to the World Bank, about half of the countries spend more than 8 per cent of their GDP while a quarter spend less than 5 percent, a level close to those of the Organisation for Economic Co-operation and Development countries.
“In Nigeria, the current level of infrastructure deficit is a major constraint to economic development and attainment of growth average rate of at least 5 to 7 percent required to boost productivity and sustainable growth for businesses” he said.